How are KBH butterfly max profit and max loss calculated?

Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the KBH butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 43.10%), the computed maximum profit is $225.00 per contract and the computed maximum loss is -$275.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a KBH butterfly?

The breakeven for the KBH butterfly priced on this page is roughly $47.25 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current KBH market-implied 1-standard-deviation expected move is approximately 12.36%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current KBH implied volatility affect this butterfly?

KBH ATM IV is at 43.10% with IV rank near 20.68%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.

KBH Butterfly Strategy

KBH (KB Home), in the Consumer Cyclical sector, (Residential Construction industry), listed on NYSE.

KB Home operates as a homebuilding company in the United States. It operates through four segments: West Coast, Southwest, Central, and Southeast. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. The company also offers financial services, such as insurance products and title services. It has operations in Arizona, California, Colorado, Florida, Nevada, North Carolina, Texas, and Washington. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in January 2001.

KBH (KB Home) trades in the Consumer Cyclical sector, specifically Residential Construction, with a market capitalization of approximately $2.92B, a trailing P/E of 8.29, a beta of 1.42 versus the broader market, a 52-week range of 45.765-68.71, average daily share volume of 1.2M, a public-listing history dating back to 1986, approximately 2K full-time employees. These structural characteristics shape how KBH stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.42 indicates KBH has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 8.29 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. KBH pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on KBH?

A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.

Current KBH snapshot

As of May 14, 2026, spot at $46.59, ATM IV 43.10%, IV rank 20.68%, expected move 12.36%. The butterfly on KBH below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 217-day expiry.

Why this butterfly structure on KBH specifically: KBH IV at 43.10% is on the cheap side of its 1-year range, which favors premium-buying structures like a KBH butterfly, with a market-implied 1-standard-deviation move of approximately 12.36% (roughly $5.76 on the underlying). The 217-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KBH expiries trade a higher absolute premium for lower per-day decay. Position sizing on KBH should anchor to the underlying notional of $46.59 per share and to the trader's directional view on KBH stock.

KBH butterfly setup

The KBH butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With KBH near $46.59, the first option leg uses a $45.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KBH chain at a 217-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 KBH shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$45.00	$6.50
Sell 2	Call	$45.00	$6.50
Buy 1	Call	$50.00	$4.25

KBH butterfly risk and reward

Net Premium / Debit: +$225.00
Max Profit (per contract): $225.00
Max Loss (per contract): -$275.00
Breakeven(s): $47.25
Risk / Reward Ratio: 0.818

Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.

KBH butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on KBH. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	+$225.00
$10.31	-77.9%	+$225.00
$20.61	-55.8%	+$225.00
$30.91	-33.7%	+$225.00
$41.21	-11.5%	+$225.00
$51.51	+10.6%	-$275.00
$61.81	+32.7%	-$275.00
$72.11	+54.8%	-$275.00
$82.41	+76.9%	-$275.00
$92.71	+99.0%	-$275.00

When traders use butterfly on KBH

Butterflies on KBH are pinning bets - traders use them when they expect KBH to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.

KBH thesis for this butterfly

The market-implied 1-standard-deviation range for KBH extends from approximately $40.83 on the downside to $52.35 on the upside. A KBH long call butterfly is a pinning play: it pays maximum at the middle strike if KBH settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current KBH IV rank near 20.68% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on KBH at 43.10%. As a Consumer Cyclical name, KBH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KBH-specific events.

KBH butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. KBH positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move KBH alongside the broader basket even when KBH-specific fundamentals are unchanged. Always rebuild the position from current KBH chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on KBH?: A butterfly on KBH is the butterfly strategy applied to KBH (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With KBH stock trading near $46.59, the strikes shown on this page are snapped to the nearest listed KBH chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are KBH butterfly max profit and max loss calculated?: Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the KBH butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 43.10%), the computed maximum profit is $225.00 per contract and the computed maximum loss is -$275.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a KBH butterfly?: The breakeven for the KBH butterfly priced on this page is roughly $47.25 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current KBH market-implied 1-standard-deviation expected move is approximately 12.36%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on KBH?: Butterflies on KBH are pinning bets - traders use them when they expect KBH to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
How does current KBH implied volatility affect this butterfly?: KBH ATM IV is at 43.10% with IV rank near 20.68%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.